Why Silicon Valley Is So Nervous About H-1B Reform

Demonstrators gather outside the Trump Hotel International last month to protest the president's executive order barring citizens of the Muslim-majority countries Iraq, Syria, Iran, Sudan, Libya, Somalia and Yemen from traveling to the United States. (Photo by Zach Gibson/Getty Images)

President Donald Trump's recent executive orders on immigration have sparked a war with Silicon Valley's leaders, who for the past week have expressed dismay and publicly protested the decisions. The most contentious aspect of the relationship, however, may prove to be the industry's use of the controversial H-1B work visa program.

The H-1B visa was designed to give tech companies a way to hire skilled immigrants without displacing American workers. But the program has come under fire in recent years, with bills from both sides of the aisle currently making their way through Congress that target the use of H-1B visas by outsourcing firms. These globally-based firms, including Tata Consultancy, Infosys and Cognizant Technology Solutions, account for the majority of H-1B visa applications filed with the government, and have been accused in recent years of gobbling up an outsized share of the visas ultimately granted.

Many of the household name technology companies preparing the sign a pending public letter, including Apple, Google and Microsoft, have tried to distance themselves from the reputation that some of these outsourcing firms have developed as so-called "body shops." Publicly available government data is limited, but the graph below illustrates the enormous gap in the number of visas sought by the two disparate groups of companies.

Graphic by Nick DeSantis / FORBES

The window for firms to begin applying for H-1B visas opens April 1. Once certified by the federal Department of Labor, H-1B requests enter a pool of other applicants that are part of a lottery to determine those ultimately granted.

Among the biggest changes under Trump could be to the cap on the number of visas approved each year (currently at 85,000 including individuals with a master's degrees or higher) and doubling of the minimum wage requirement to $130,000 annually. Immigration lawyers say that while proposed changes to the work visa program could present a major challenge for tech firms, they likely would not take effect until later this year at the earliest. "Anything they do would have to go through regulatory rulemaking, which takes at least 60 days. And many changes would have to go through Congress," said Sam Adair, an immigration attorney at the Austin, Texas-based law firm Graham Adair. "It’s not a concern about this year’s cap, but more about what’s coming down the road."

Companies can expect to spend between $15,000 and $25,000 to obtain a green card for each H-1B employee, Adair estimated, which often takes a few years but in some cases can be long as a decade or more. Adair scoffed at the notion that tech companies were using the H-1B program to save money or avoid hiring American citizens.

"It’s fairly expensive. This isn’t an effort on the part of employers to get cheaper labor… it’s really an effort to bring in the best available talent," Adair said, adding that recent statements by CEO's whose companies rely on the program for hiring underscored their contention with Trump. "It’s a good indication of how critical access to this talent pool is to their companies."

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